CVH.L Regulatory News (CVH)

6 Sep 2006 07:01

Cavanagh Group PLC06 September 2006 Cavanagh Group plc ("Cavanagh" or "The Group") Unaudited Interim Results for the six months ended 30 June 2006 Cavanagh Group PLC, one of the leading firms of Independent Financial Advisers,announces its interim results for the six months to 30th June 2006. Key Points • Turnover up by 13% to £7,068,000 (2005: £6,255,000) • Significant improvement in operating profit to £443,000 from a loss of £94,000 in 2005 • Pre-tax profit of £417,000 from a pre-tax loss of £192,000 • Operating cash inflow of £1,026,000 (2005: outflow of £311,000) Andrew Fay, Chief Executive, comments: "As anticipated, a very encouraging start to 2006 with the Group reporting apre-tax profit following last year's concentration on generating operatingefficiencies. We remain focused on building further on the progress achieved todate" Cavanagh Group plc Andrew Fay (Chief Executive) 01444 475400 Cavanagh Group plc ("Cavanagh" or "The Group") Unaudited Interim Results for the six months ended 30 June 2006 Chairman's Statement Financial performance: I am extremely pleased to report these interim results for the six months ended30 June 2006 which show turnover of £7,068,000 (2005: £6,255,000), an operatingprofit of £443,000 (2005: loss of £94,000) and, importantly, a pre-tax profit of£417,000 (2005: loss of £192,000). The business has generated an operating cashinflow of £1,026,000 (2005: outflow £311,000). Following the improvement seen in the results for 2005 these figures clearlydemonstrate Cavanagh's progress. Operations: As indicated previously, the Group's focus on generating profitable growthcontinues with particular emphasis being placed on increasing our clients'assets under management which currently exceed £1billion; we are also continuingto provide support to our consultants which has enabled them to generate averagerevenue in excess of £200,000 per annum. Attracting and retaining high quality consultants remains core to our model aswe have established a reputation for delivering the highest levels of support toour consultants, for both technical advice and administrative services. In July2005, we installed a new back office system enabling us to drive throughoperating efficiencies; a year on from this, the benefits to the business areapparent with greater clarity in our management information which in turn allowsus to focus on increasing our profitability. Our marketing department continuesto provide the backbone of our activity for consultants with the emphasis onhigh net worth individuals (HNWs), professionals and corporates remaining ourcore market. Cavanagh has an established proven business model focussing onthese clients. The infrastructure is established to provide consultants withsuitable numbers of high quality meetings which in turn has allowed them todevelop and maintain the very highest levels of productivity and earnings. CPRM, our actuarial and pension advisory service, continues to grow and remainsprofitable with its recurring income now accounting for over 45% of its income. Business Opportunities: Management continues to develop strong business relations with both our existingintroducers as well as new opportunities focused in the HNW and professionalareas. These opportunities have arisen through brand awareness as our reputationhas strengthened, this being our tenth year involved in advising clients in thelegal sector. This, as well as a maturing of the client bank, many of whom havenow become partners with their more complex planning requirements, is partlyresponsible for the increase in business volume. Although there is no doubt that the first half year has benefited from A-Day itis evident that there is ongoing work caused by the legislative changes in thisarea; indeed, early evidence indicates that post A-Day work will generate morebusiness than that pre A-Day. During the period more development has been undertaken in the corporate arenawith further clients signing up for the services offered by our corporatedivision including several high profile companies and one FSTE 100 company. Given the board's objective of generating profitable growth we anticipate,particularly in the near-term, that acquisitions will only be considered whenand where the enhancement of shareholder value can be clearly demonstrated. Outlook: Now that the Group has demonstrated it has developed a profitable businessmodel, the focus is on maximising its existing opportunities by continuing toattract high-calibre consultants and support staff, delivering a high qualityservice to our clients, and thoroughly evaluating any new growth opportunitiesthat present themselves. We consider that Cavanagh is well placed to achievelasting success and accelerate its growth. John CampbellChairman5 September 2006 Cavanagh Group plc 6 Months 6 Months Year endedGroup profit and loss account 30-Jun-06 30-Jun-05 31-Dec-05 Unaudited Unaudited Audited (restated*) (restated*) £'000 £'000 £'000 TURNOVER: 7,154 6,295 12,160Group and share of joint venture'sturnover Less: share of joint venture's turnover (86) (40) (107) -------- --------- --------TURNOVER 7,068 6,255 12,053 -------- --------- -------- OPERATING PROFIT/(LOSS)Before goodwill amortisation 543 6 23Goodwill amortisation (100) (100) (202) -------- --------- -------- 443 (94) (179) Share of joint venture operating profit 85 40 105Net interest payable (111) (138) (263) PROFIT/(LOSS) ON ORDINARY ACTIVITIES 417 (192)BEFORE TAXATION (337) Tax on profit/(loss) on ordinaryactivities (143) (16) (124) PROFIT/(LOSS) ON ORDINARY ACTIVITIES 274 (208)AFTER TAXATION (461) Minority interest (5) - (2) ======== ========= ======== RETAINED PROFIT/(LOSS) 269 (208) (463) ======== ========= ======== Earnings per share - basic (pence) 2.48p (1.91)p (4.26)pEarnings per share - fully diluted(pence) 2.47p (1.91)p (4.26)p The operating profit/(loss) for the period arises from the group's continuingoperations. No separate Statement of Total Recognised Gains and Losses has beenpresented as all such gains and losses have been dealt with in the Profit andLoss Account. * restated following the adoption of FRS 20 from 1 January 2006 (see note 1) Cavanagh Group plcGroup Balance Sheet 30-Jun-06 30-Jun-05 31-Dec-05As at 30 June 2006 Unaudited Unaudited Audited £'000 £'000 £'000FIXED ASSETSIntangible assets 1,425 1,695 1,525Tangible 494 694 605Investments - share of assets of jointventure 2 2 2 --------- --------- --------- 1,921 2,391 2,132 --------- --------- --------- CURRENT ASSETSDebtors 3,038 3,629 3,281Cash 1,563 501 906 --------- --------- --------- 4,601 4,130 4,187 CREDITORS - Amounts falling due withinone year (3,035) (2,431) (2,817) --------- --------- ---------NET CURRENT ASSETS 1,566 1,699 1,370 --------- --------- ---------TOTAL ASSETS LESS CURRENT LIABILITIES 3,487 4,090 3,502 CREDITORS - Amounts falling due after oneyear (3,200) (3,800) (3,500) PROVISION FOR LIABILITIES AND CHARGES (248) (287) (247) --------- --------- ---------NET ASSETS 39 3 (245) ========= ========= ========= CAPITAL AND RESERVESCalled up share capital 109 109 109Share premium account 2,706 2,706 2,706Profit and loss account (2,778) (2,807) (3,057) --------- --------- ---------EQUITY SHAREHOLDERS' FUNDS 37 8 (242)Non-equity minority interests 2 (5) (3) --------- --------- --------- 39 3 (245) ========= ========= ========= Cavanagh Group plc 6 Months 6 Months Year endedGroup Cash Flow Statement 30-Jun-06 30-Jun-05 31-Dec-05For the period to 30 June 2006 Unaudited Unaudited Audited £'000 £'000 £'000 -------- --------- --------NET CASH INFLOW/(OUTFLOW) FROM 1,026 (311) 451OPERATING ACTIVITIES -------- --------- -------- RETURNS ON INVESTMENTS ANDSERVICING OF FINANCEDividends received from joint venture 69 40 89Net interest paid (111) (138) (264) -------- --------- --------NET CASH OUTFLOW FROM RETURNS ONINVESTMENT AND SERVICING OF FINANCE (42) (98) (175) -------- --------- -------- CAPITAL EXPENDITUREPurchase of tangible fixed assets (27) (112) (159) -------- --------- --------NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (27) (112) (159) ACQUISITIONS AND DISPOSALSPurchase of subsidiary undertakings - - 67 -------- --------- --------NET CASH OUTFLOW FROM ACQUISITIONS ANDDISPOSALS - - 67 -------- --------- -------- NET CASH INFLOW/(OUTFLOW) BEFOREFINANCING 957 (521) 184 -------- --------- -------- FINANCINGRepayment of bank loans (300) (100) (400) -------- --------- --------NET CASH OUTFLOW FROM FINANCING (300) (100) (400) -------- --------- --------INCREASE/(DECREASE) IN CASH 657 (621) (216) ======== ========= ======== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT £'000 £'000 £'000 Increase/(decrease) in cash in the period 657 (621) (216)Net cash outflow from debt financing 300 100 400 -------- --------- --------Change in net funds 957 (521) 184Net debt as 1 January (3,194) (3,378) (3,378) -------- --------- --------Net debt as 31 December (2,237) (3,899) (3,194) ======== ========= ======== Notes to the Interim Financial Statements 1. Basis of preparation of interim financial information The principal accounting policies of the Group have remained unchanged fromthose set out in the Group's 2005 Annual Report and Financial Statements, withthe exception of accounting for share based payments. This follows the adoptionof Financial Reporting Standard No. 20 ('FRS 20' - Share based payments) for theyear ended 31 December 2006. The interim results include the impact of the FRS20 and both comparative 2005 results have been restated to reflect the change inaccounting policy. The financial information contained in this interim report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Thefigures for the year ended 31 December 2005 have been extracted from thestatutory financial statements (restated following the adoption of FRS 20) whichhave been filed with the Registrar of Companies. The auditors' report on thosefinancial statements was unqualified and did not contain a statement undersection 237(2) or 237 (3) of the Companies Act 1985. The accounts have beenprepared in accordance with applicable accounting standards and under thehistorical cost accounting rules. The Board of Directors approved the interim financial statements on 5 September2006 2. Earnings per share The calculation of basic earnings per share in based on earnings of £269,000 (6months ended 30 June 2005: £208,000 loss; year ended 31 December 2005: £463,000loss) and on the weighted average number of shares in issue during the period of10,868,000 (6 months ended 30 June 2005: 10,868,000; year ended 31 December2005: 10,868,000). 6 Month 6 Months 12 Months 30-Jun-06 30-Jun-05 31-Dec-05 Unaudited Unaudited Audited No No No Basic weighted average number of 10,868,000 10,868,000 10,868,000sharesDilutive potential ordinary shares:Employee share options 14,310 - - ------------ ------------ ----------- 10,882,310 10,868,000 10,868,000 ============ ============ =========== The loss for the period and the weighted average number of ordinary shares forcalculating the diluted earnings per share for the 6 months ended 30 June 2005and year ended 31 December 2005 is identical to those used for the basicearnings per share. This is because the outstanding share options would have theeffect of reducing the loss per ordinary share and would therefore not bedilutive under the terms of Financial Reporting Standard No 22 (FRS 22). 3. Reconciliation of equity shareholders' funds 6 Month 6 Months 12 Months 30-Jun-06 30-Jun-05 31-Dec-05 Unaudited Unaudited Audited (restated*) (restated*) £'000 £'000 £'000 Retained profit/(loss) for the period 269 (208) (463)Share based payment 10 2 7Increase/(decrease) in equity shareholderfunds 279 (206) (456)Opening equity shareholder (deficit)/funds (242) 214 214 --------- -------- ---------Closing equity shareholder funds/(deficit) 37 8 (242) ========= ======== ========= 4. Reconciliation of operating profit/(loss) to net cash outflow from operating activities 6 Month 6 Month 12 Months 30-Jun-06 30-Jun-05 31-Dec-05 Unaudited Unaudited Audited (restated*) (restated*) £'000 £'000 £'000 Operating profit/(loss) 443 (94) (179)Share based compensation 10 2 7Amortisation of goodwill 100 100 202Depreciation 138 124 261Decrease/(increase) in debtors 116 (412) (155)Increase/(decrease) in creditors 219 (31) 315Net cash inflow/(outflow) from operatingactivities --------- -------- --------- 1,026 (311) 451 ========= ======== ========= 5. Analysis of net debt Non-cash 1-Jan-06 Cash Flow movements 30-Jun-06 £'000 £'000 £'000 £'000 Cash at bank and inhand 906 657 - 1,563 --------- --------- -------- ---------Bank loans (4,100) 300 - (3,800) --------- --------- -------- ---------Net debt (3,194) 957 - (2,237) ========= ========= ======== ========= 6. Copies of this report will be sent to shareholders shortly and available fromThe Courtyard, Staplefield Road, Cuckfield, West Sussex RH17 5JT. This information is provided by RNS The company news service from the London Stock Exchange